Why should insurance embrace automation?

The mere mention of the word automation instils fear in the hearts of most employees. But it does not have to be the case.

Automation in the workplace can lead to significant opportunities across the insurance value chain.

To quote a recent Harvard Business Review article, “technology eliminates jobs, not work.” Insurers, just like companies across all industry sectors, have a choice to make. Either they can view the shift towards automation as a threat, or they can see it as the means to unlock growth potential.

Just consider how automation during the industrial revolution transformed the textile and manufacturing industries. Clearly, many people today work in textiles and manufacturing, but their work differs substantially from the weavers and blacksmiths of the 1700s. One of the important changes is the volume of output per worker which has brought huge economic benefits to all.

We consider technology that automates tasks as something that replaces human skills, human jobs, and human expertise. However, automation removes the repetitiveness of mundane tasks and leads to new jobs that require a higher level of skills or expertise. If it was not for technology, how would we arrive at such innovative jobs as data scientists?

Changing gears

Automation is more than just robots or artificial intelligence coming for our jobs. Automation will fundamentally change how business today operates and the extent at which it differentiates from competitors. A big part of this revolves around how automation can easily perform repetitive administration functions. While some might be concerned about the negative impact it will have on their jobs, the reverse is true. By giving employees additional time they would not have had previously, companies can empower them to do more advanced tasks that require better insight and strategic thought.

Many insurers still operate with a pre-internet way of doing things. Change is a slow, onerous process because the automation required is not obvious and neither are its benefits. The short-term threats to the perceived loss of work to the existing workforce create inertia that becomes difficult to overcome. The challenge is that faster, more agile insurtechs are emerging that do not fear change. Instead, they embrace it and try to use all aspects of automation to drive business performance and growth.

These fast-changing players mean traditional thinkers are losing customers who require products and services that meet their digital requirements. Automation provides a powerful tool to do so especially when it comes to data analysis and analytics as well as integrating with business intelligence solutions. This gives decision-makers more accurate, more real-time, and more relevant information to make informed decisions for product development and strategic changes.

Regulatory explanations

Some of these traditionalists are using the stricter regulatory environment (think POPI and the like) as reason for a lack of innovation and embracing automation solutions or approaches. Yet, because of regulation, insurers need to utilise technology in different ways to not only safeguard sensitive data but develop more niche solutions tailored to all clients.

Machine-learning (artificial intelligence) and automation often go together. Naturally, this could lead to some job functions becoming redundant depending on the level of automation used. Yet, despite this, those employees can be integrated into other areas of the business based on their experience and skills sets (especially when those are enhanced with additional training).

This will result in insurers focusing on jobs (and tasks) that can deliver more value-add not only internally but also to customers. Automation is not something that should be kicked against. Rather, insurers need to pro-actively take charge and utilise it for all the benefits it will provide.